Exam 29: Relationship With Third Parties

Southern Furniture Co. hired Chuck to drive a company truck and deliver furniture. Chuck had a spotless driving record and did well on his driving test. Belinda ordered a chair from Southern Furniture Co. and arranged for its delivery on her lunch hour. Belinda was at home when Chuck delivered the chair. After delivering the chair, Chuck brutally raped Belinda, causing severe physical and psychological injuries. Chuck was convicted in the criminal courts. During the trial it was revealed that Chuck had been in a mental institution for the criminally insane for two years because he had brutally assaulted his mother and other women. He also had a lengthy criminal rap sheet involving theft crimes. Belinda sought compensation for her physical and psychological injuries from both Chuck and Southern Furniture Co. in civil court. Discuss what the probable outcome of this case would be with regard to the issues of: (a) respondeat superior and (b) general tort liability of principals for the unauthorized acts of their agents.

Under the Second Restatement, the bankruptcy of the principal terminates, without notice, the power of an agent to affect the principal's property that passes to the bankruptcy trustee.

A principal's intention to permit the agent to delegate granted authority may only be gathered from the express authorization of the principal.

The doctrine of __________ is the basis for an employer's liability for an unauthorized tort committed by an employee within the scope of employment.

An undisclosed principal may result in which of the following?

Actual notice requires a written, not oral, communication to the third party.

Sam is George's agent. George decides to fire Sam. Mel is an old customer of George's and he has dealt with Sam for over 20 years. Ellie is a prospective customer that Sam has spoken with on numerous occasions in his capacity as George's agent, and George was aware of the preliminary negotiations. Mel orders goods from Sam after Sam has been fired but Mel has no knowledge of the firing. Later, Sam takes an order from Ellie, who does not know of the firing. Using the rules of the Second Restatement, which of the following statements would apply to this scenario?

An employer may have criminal liability for the acts of an employee.

An agent who has either actual or apparent authority has the power to bind his principal.

An agent may agree to become liable on a contract between a principal and a third party in all but which of the following ways?

Gerald, an agent, who makes a contract with Adele on behalf of Leon, an unidentified principal, may maintain in Gerald's own name a breach of contract action against Adele.

To effect a ratification, the principal must manifest an intent to do so with knowledge of all material facts concerning the transaction.

A subagent is an agent of both the principal and the agent.

An agent acts for a(n) __________ principal when the agent appears to be acting on her own behalf and the third person with whom she is dealing has no knowledge that she is an agent.

Rena employs James, a real estate broker, to find a buyer for her home for a price of at least $125,000. James has the actual implied authority to contract for the sale of Rena's home.

Apparent authority arises out of words or conduct of a disclosed or partially disclosed principal manifested to third persons.

Upon the termination of an agency, the agent's actual authority ceases. However, apparent authority may continue until actual notice of the termination is given to third parties.

Under the Second Restatement, except in cases of death or incapacity, or where the performance of an authorized act becomes impossible, actual notice of termination of agency is required to the third party if she is one:

Regarding the effect of termination of agency on authority, the general rule of the Third Restatement is that:

In the Parlato v. Equitable Life Assurance Society of the United States case, the court held: